**UNITED STATES**
 **SECURITIES AND EXCHANGE COMMISSION**
 **Washington, D.C. 20549**
 
 **FORM 10-QSB**
 
 **[ X ]**
**QUARTERLY REPORT UNDER SECTION 13 0R 15(****d****) OF THE SECURITIES EXCHANGE ACT OF 1934** 
 For the quarterly period ended  **September 30, 2004**
 
 **[ ]**
**TRANSITION REPORT UNDER SECTION 13 0R 15(****d****) OF THE SECURITIES EXCHANGE ACT OF 1934** 
 For the transition period from     to
 
 
 **Commission file number** **000-33309**
 
 
 **GLOBETRAC INC.**(Exact name of small business issuer as specified in its charter) 
 
 Incorporated in the State of Delaware
(State or other jurisdiction of incorporation or organization)
33-0953557
(I.R.S. Employer Identification No.)Wyvols Court, Old Basingstoke Road, Swallowfield, Reading, Berkshire, United Kingdom, RG7 1WY
(Address of principal executive offices)44-118-988-0233
(Issuers telephone number)42 Brook Street, London, W1K 5DB, United Kingdom
(Former name, former address and former fiscal year, if changed since last report) 
 
 
 **APPLICABLE ONLY TO CORPORATE ISSUERS**
 
 State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date.
 **Class**
**Outstanding at August 13, 2004**Common Stock - $0.001 par value
22,190,000 
 Transitional Small Business Disclosure Format (Check one): **Yes [ ] No [ X ]**
 
  ***Page - 1***  **PART I - FINANCIAL INFORMATION**
 
 **Item 1.**  **Financial Statements.**
 ****
 **GLOBETRAC INC.**
 
 **CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 **As at September 30, 2004 and December 31, 2003 and**
 **for the three and nine month periods ended September, 2004 and 2003**
 **UNAUDITED**
 
   
 **CONSOLIDATED BALANCE SHEETS**
 
 **CONSOLIDATED STATEMENTS OF OPERATIONS**
 
 **CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT AND COMPREHENSIVE INCOME**
 
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**
 
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**
 
  ***Page - 2***   **GLOBETRAC INC.**
 ****CONSOLIDATED BALANCE SHEETS****
 **UNAUDITED**
  ****

**September 30,**

**December 31,****2004**


**2003****ASSETS****CURRENT ASSETS**Cash

$
14,060

$
8,810Accounts receivableNet of allowance for doubtful accounts of $31,369 and $30,396


159,596


62,756Inventory


136,075


378,713Prepaids


14,028


19,145323,759


469,424Fixed assetsNet of $5,839 and $3,443 accumulated depreciation


6,939


7,127**TOTAL ASSETS**

$
330,698

$
476,551**LIABILITIES AND STOCKHOLDERS' DEFICIT****CURRENT LIABILITIES**Accounts payable and accrued liabilities

$
177,725

$
149,418Convertible notes payable on demand


1,571,167


673,805Due to related parties


503,662


160,003Note payable to related party


500,000


500,000Advances payable


7,602


380,6492,760,156


1,863,875Commitment and Contingencies**STOCKHOLDERS' DEFICIT**Share capitalAuthorized200,000,000 common shares, $0.001 par value5,000,000 preferred shares, $0.001 par valueIssued and outstanding:22,190,000 common shares


22,190


22,190Additional paid in capital


1,167,085


1,167,085Accumulated deficit


(3,636,428
)

(2,599,335
)Other comprehensive income:Foreign currency translation adjustment


17,695


22,736**Total Stockholders' Deficit**


(2,429,458
)

(1,387,324
)**TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT**

$
330,698

$
476,551The accompanying notes are an integral part of these consolidated financial statements
    ***Page - 3***
  **GLOBETRAC INC.**
 ****CONSOLIDATED STATEMENTS OF OPERATIONS****
 **UNAUDITED**
  ****


**Three Months Ended**


**Nine Months Ended******


**September 30,**


**September 30,****2004**


**2003**


**2004**


**2003****REVENUE**Sales

$
96,135

$
236,762

$
913,867

$
369,387Cost of Goods Sold


65,204


163,349


614,502


253,544Gross Profit


30,931


73,413


299,365


115,843**OPERATING EXPENSES**Administrative expenses


349,965


390,511


1,151,850


1,109,382Selling expenses


7,840


83,902


91,845


134,535Total Operating Expenses


357,805


474,413


1,243,695


1,243,917Loss from operations


(326,874
)

(401,000
)

(944,330
)

(1,128,074
)**OTHER EXPENSES**Foreign exchange transaction gains


1,654


(18,474
)

8,156


(16,716
)Interest expense


(48,433
)

(24,781
)

(100,119
)

(73,280
)Total Other Expenses


(46,779
)

(43,255
)

(91,963
)

(89,996
)Net loss for the period before tax provision


(373,653
)

(444,255
)

(1,036,293
)

(1,218,070
)Provision for income tax


(800
)

(800
)
$
(800
)

(800
)**NET LOSS FOR PERIOD**

$
(374,453
)
$
(445,055
)
$
(1,037,093
)
$
(1,218,870
)**OTHER COMPREHENSIVE INCOME (LOSS)**Foreign currency translation adjustments


22


7,779


(5,041
)

6,552**COMPREHENSIVE INCOME (LOSS)**

$
(374,431
)
$
(437,276
)
$
(1,042,134
)
$
(1,212,318
)**BASIC AND DILUTED****LOSS PER SHARE**

$
(0.02
)
$
(0.02
)
$
(0.05
)
$
(0.06
)**WEIGHTED AVERAGE****SHARES OUTSTANDING**


22,190,000


21,040,000


22,190,000


21,040,000The accompanying notes are an integral part of these consolidated financial statements
 
 ***Page - 4***
 
  **GLOBETRAC INC.**
 ****CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT AND COMPREHENSIVE INCOME****
 **FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003**
 **UNAUDITED**
  ****

**Common Stock Issued**


**Common Stock******







**Subscribed**




****
**Accumulated******






**Additional**











**Other******


**Number of**





**Paid-in**


**Number of**





**Accumulated**


**Comprehensive******


**Shares**


**Amount**


**Capital**


**Shares**


**Amount**


**Deficit**


**Income**


**Total****Balance, October 1, 2002**


**21,040,000**

**$**
**21,040**

**$**
**18,235**


**-**

**$**
**-**

**$**
**(484,867**
**)**
**$**
**(3,644**
**)**
**$**
**(449,236**
**)**Net loss for the three month period endedDecember 31, 2002


**-**


**-**


**-**


**-**


**-**


(341,770
)

-


(341,770
)Foreign currency translation adjustments


**-**


**-**


**-**


**-**


**-**


**-**


13,585


13,585**Balance, December 31, 2002**


**21,040,000**


**21,040**


**18,235**


**-**


**-**


**(826,637**
**)**

**9,941**


**(777,421**
**)**Common stock subscribed


**-**


**-**


**-**


750,000


750,000


**-**


**-**


750,000-Net loss for the nine month period endedSeptember 30, 2003


-


-


-


-


-


(1,218,870
)

-


(1,218,870
)-Foreign currency translation adjustments


-


-


-


-


-


-


6,552


6,552--**Balance, September 30, 2003**


**21,040,000**


**21,040**


**18,235**


**750,000**


**750,000**


**(2,045,507**
**)**

**16,493**


**(1,239,739**
**)**-Reg S, Private Placement, shares issuedfor cash, November 24, 2003


900,000


900


899,100


(750,000
)

(750,000
)

-


-


150,000Common stock subscribed,November 21, 2003


-


-


-


250,000


250,000


-


-


250,000Net loss for the three month period endedDecember 31, 2003


**-**


**-**


**-**


**-**


**-**


(553,828
)

**-**


(553,828
)Foreign currency translation adjustments


-


-


-


-


-


-


6,243


6,243**Balance, December 31, 2003**


**21,940,000**


**21,940**


**917,335**


**250,000**


**250,000**


**(2,599,335**
**)**

**22,736**


**(1,387,324**
**)**Reg S, Private Placement, shares issued****for cash, June 9, 2004


250,000


250


249,750


(250,000
)

(250,000
)

**-**


**-**


**-**Net loss for the nine month period endedSeptember 30, 2004


-


-


-


-


-


(1,037,093
)

-


(1,037,093
)Foreign currency translation adjustments


-


-


-


-


-


-


(5,041
)

(5,041
)**Balance, September 30, 2004**


**22,190,000**

**$**
**22,190**

**$**
**1,167,085**


**-**

**$**
**-**

**$**
**(3,636,428**
**)**
**$**
**17,695**

**$**
**(2,429,458**
**)**The accompanying notes are an integral part of these consolidated financial statements
   ***Page - 5***
 **GLOBETRAC INC.**
 ****CONSOLIDATED STATEMENTS OF CASH FLOWS****
 **UNAUDITED**
  ****


**Nine Months Ended******


**September 30,****2004**


**2003****CASH FLOWS FROM OPERATING ACTIVITIES**Net loss for the period

$
(1,037,093
)
$
(1,218,870
)Adjustment to reconcile net loss to net cashused in operating activities:Depreciation


2,397


1,448Change in operating assets and liabilities:(Increase) in accounts receivable


(96,840
)

(35,646
)Decrease (Increase) in inventory


242,638


(31,071
)Decrease in prepaids


5,117


41,185Increase (Decrease) in accounts payable and accrued liabilities


28,307


(62,969
)Increase in accrued interest payable to related party


37,432


37,397Increase in accounts payable to related parties


306,227


25,875Increase in accrued interest payable on convertible notes


61,419


36,001**NET CASH USED IN OPERATING ACTIVITIES**


(450,396
)

(1,206,650
)**CASH FLOWS FROM INVESTING ACTIVITIES**Purchase of fixed assets


(2,209
)

(5,266
)**NET CASH USED IN INVESTING ACTIVITIES**


(2,209
)

(5,266
)**CASH FLOWS FROM FINANCING ACTIVITIES**Loans and advances payable


5,460


316,830Shares subscribed


-


750,000Increase in convertible notes payable on demand


457,436


-**NET CASH PROVIDED BY FINANCING ACTIVITIES**


462,896


1,066,830Effect of exchange rate changes on cash


(5,041
)

6,552**INCREASE (DECREASE) IN CASH**


**5,250**


**(138,534**
**)****CASH, BEGINNING OF PERIOD**


8,810


210,229**CASH, END OF PERIOD**

**$**
**14,060**

**$**
**71,695**Supplemental disclosure of cash flow information:Cash paid during the period for:Income taxes

$
800

$
800Non-cash financing transactions:Conversion of accrued interest payable to convertible notes payable

$
66,521

$
-Conversion of advances payable to convertible notes payable

$
378,508

$
-The accompanying notes are an integral part of these consolidated financial statements
  
  ***Page - 6***  **GLOBETRAC INC.**
 ****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS****
 **UNAUDITED**
 **September 30, 2004**
 
 **NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION**
 
 Nature of Operations
 
 GlobeTrac Inc. (the "Company") is in the business of selling, marketing, distributing and installing global wireless tracking and telematics equipment. The Company was incorporated in the state of Delaware on March 2, 2000, and its principal executive offices are headquartered in London, England.
 
 Basis of Presentation
 
 The unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2004 and 2003 are not necessarily indicative of the results that may be expected for any interim period or the entire year. For further information, these consolidated financial statements and the related notes should be read in conjunction with the Companys audited financial statements for the year ended December 31, 2003 included in the Companys annual report on Form 10-KSB.
 
 **NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 A summary of the Companys significant accounting policies is included in the Companys 2003 Annual Report. Additional significant accounting policies which affect the Company or which have been developed since December 31, 2003 are summarized below:
 
 Principles of Consolidation
 
 The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Global Axxess Corporation Limited ("Global Axxess"). Investment in Global Axxess is carried at cost and all intercompany balances and transactions have been eliminated.
 
 Foreign Currency
 
 The financial statements of the Companys foreign subsidiary are measured using British Pounds and the Euro as the functional currencies. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at the average exchange rates for the period. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders equity. Foreign currency transaction gains and losses are included in consolidated net losses.
 
 Comprehensive Income
 
 The Company presents comprehensive income in its Consolidated Statements of Changes in Stockholders Deficit and Comprehensive Income. Total comprehensive income includes, in addition to net loss, changes in equity that are excluded from the consolidated statements of operations and are recorded directly into the separate section of stockholders deficit on the consolidated balance sheets.
 
 In December 2003, the Financial Accounting Standards Board ("FASB") issued a revised Interpretation No. 46 ("FIN 46R"), Consolidation of Variable Interest Entities. Fin 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation polices to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conduced through variable interest entities. As of September 30, 2004, the Company is not a party to any variable interest entity. The Company does not expect that adoption of FIN No. 46 or FIN 46R will have a material effect on its financial position or results of operations.
  ***Page - 7***  
 **GLOBETRAC INC.**
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**
 **UNAUDITED**
 
 **NOTE 3 - CONVERTIBLE NOTES PAYABLE**
 
 At September 30, 2004 and December 31, 2003, the Company had a note payable in the amount of $162,149. At September 30, 2004 and December 31, 2003, $9,729 and $nil interest had been accrued on this note. This note is unsecured, bears interest at 8%, is payable on demand and at the option of the Company is convertible into common shares of the Company at $0.50 per share.
 
 At September 30, 2004 and December 31, 2003, the Company had notes payable totalling $511,660. At September 30, 2004 and December 31, 2003, $30,644 and $nil interest had been accrued on these notes. These notes are unsecured, bear interest at 8% are payable on demand and at the option of the Company are convertible into common shares of the Company at $0.50 per share.
 
 At September 30, 2004 the Company issued notes payable totalling $835,940. At September 30, 2004 and December 31, 2003, $21,046 and $nil interest had been accrued on these notes. These notes are unsecured, bear interest at 10% are payable on demand and at the option of either the Company or the lender are convertible into common shares of the Company at market price less 20%, with a minimum conversion price of $0.15 per share. (Note 6)
 
 **NOTE 4 - DUE TO RELATED PARTIES**
 
 At September 30, 2004 and December 31, 2003, the Company was indebted to a company sharing a common officer with the Company in the amount of $4,755. This debt is unsecured, non-interest bearing and has no fixed terms of repayment. During the nine month periods ended September 30, 2004 and 2003, this same related company was paid $nil and $160,000, for administrative and corporate communication fees.
 
 At September 30, 2004 and December 31, 2003, the Company was indebted to a company controlled by an officer of the Company in the amount of $159,227 and $20,171. This debt is unsecured, non-interest bearing and has no fixed terms of repayment. During the nine month periods ended September 30, 2004 and 2003, this same company was paid $180,000 and $20,000 for administrative fees.
 
 At September 30, 2004 and December 31, 2003, the Company was indebted to a company sharing a common director in the amounts of $14,565 and $13,173. This debt is unsecured, non-interest bearing and has no fixed terms of repayment.
 
 At September 30, 2004 and December 31, 2003, the Company was indebted to a company controlled by an officer of the Company in the amounts of $5,443 and $7,946. This debt is unsecured, non-interest bearing and has no fixed terms of repayment. During the nine month periods ended September 30, 2004 and 2003, this related party provided consulting services to the Company amounting to $74,673 and $19,172.
 
 At September 30, 2004 and 2003, the Company paid or had payable $152,848 and $16,500 to directors and officers of the Company in salary and management fees.
 
 At September 30, 2004 and December 31, 2003, the Company was indebted to a director in the amounts of $222,275 and $59,163. During the nine month periods ended September 30, 2004 and 2003 the Company paid or had payable, to this same director, $207,939 and $208,330 for rent and management fees.
 
 **NOTE 5 - NOTE PAYABLE TO RELATED PARTY**
 
 At September 30, 2004 and December 31, 2003, the Company had a note payable to a director of the Company in the amount of $500,000, plus accrued interest of $92,226 and $54,795. This note is unsecured, bears interest at 10% and is due November 27, 2004.
 
  ***Page - 8***  **GLOBETRAC INC.**
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**
 **UNAUDITED**
 
 **NOTE 6 - ADVANCES PAYABLE**
 
 At September 30, 2004 and December 31, 2003, the Company had advances payable of $7,602 and $380,649. These advance payable bear no interest, are unsecured and have no fixed terms of repayment. During the period $378,508 of the December 31, 2003 advances were converted to convertible notes payable. (Note 3)
 
 **NOTE 7 - COMMON STOCK**
 
 On June 21, 2002, the Company cancelled 3,800,000 of its issued and outstanding common shares and returned the shares to treasury.
 
 On July 29, 2002, the authorized share capital of the Company increased from 55,000,000 shares to 205,000,000 shares with a par value of $0.001, consisting of 200,000,000 common shares and 5,000,000 preferred shares.
 
 On August 8, 2003, the directors of the Company approved a private placement for up to 1 million units at $1 per unit, under Regulation S of the United States Securities Act of 1933. Each unit consists of one restricted common share of the Company and one non-transferable share purchase warrant. Each warrant entitles the subscriber to purchase one additional restricted common share of the Company at a price of $1.10 per share. On November 25, 2003, the directors of the Company approved an increase in the private placement to 2 million units.
 
 On August 22, 2003, the Company entered into two Regulation S private placement agreements whereby the Company agreed to issue 750,000 restricted units at $1 per unit, consisting of 750,000 restricted common shares and one share purchase warrant exercisable by the holder at $1.10 per share for up to 750,000 restricted common shares of the Company, until August 26, 2005.
 
 On October 1, 2003, the Company entered into a Regulation S private placement agreement whereby the Company agreed to issue 150,000 restricted units at $1 per unit, consisting of 150,000 restricted common shares and one share purchase warrant exercisable by the holder at $1.10 per share for up to 150,000 restricted common shares of the Company, until October 7, 2005.
 
 On November 21, 2003, the Company entered into two Regulation S private placement agreements whereby the Company agreed to issue 250,000 restricted units at $1 per unit, consisting of 250,000 restricted common shares and one share purchase warrant exercisable by the subscriber at $1.10 per share for up to 150,000 and 100,000 restricted common shares of the Company, until November 28, 2005 and December 1, 2005.
 
 On July 1, 2004, the Company entered into a stock option agreement with an employee whereby the Company granted the employee an option to acquire 500,000 restricted common shares. Under the terms of this option agreement 250,000 optioned shares are exercisable at a price of $0.50 per optioned share and 250,000 optioned shares are exercisable at a price of $0.70 per optioned share. This option can be exercised at anytime between July 1, 2006 and June 30, 2009.
 
 On July 1, 2004, the Company entered into a stock option agreement with an officer of the Companys subsidiary, whereby the Company granted the officer an option to acquire 350,000 restricted common shares. Under the terms of this option agreement 175,000 optioned shares are exercisable at a price of $0.50 per optioned share and 175,000 optioned shares are exercisable at a price of $0.70 per optioned share. This option can be exercised at anytime between July 1, 2006 and June 30, 2009.
 
  ***Page - 9***  
 **GLOBETRAC INC.**
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**
 **UNAUDITED**
 
 **NOTE 8 - DEPENDENCE ON KEY SUPPLIER**
 
 On June 19, 2002, the Companys wholly owned subsidiary entered into a two year master distribution agreement with the manufacturer and supplier of a wireless vehicle tracking, communications and telematics system, whereby the Company has the rights to market and distribute the telematics hardware and software products throughout Europe. By letter agreement dated June 4, 2003, the master distribution agreement was extended to October 15, 2007 and the Companys purchase requirements changed to ordering a minimum of 1,000 units before September 15, 2003 and ordering a minimum of 6,000 units by October 15, 2004, the minimum ordering requirements subsequent to October 15, 2004 have not been determined. Due to the uniqueness of the telematics equipment, the Company is dependent on this supplier, thus failure to obtain product or meet the unit minimum purchase requirements may have an adverse financial effect on the Company. On March 8, 2004, the Company entered into a letter agreement with the supplier of their wireless vehicle tracking products whereby the supplier agreed to allow the Company to delay meeting their minimum purchase requirements until May 1, 2004, in exchange for giving up their exclusive rights to sell their products in the following countries in Europe; Belarus, Bulgaria, Cyprus, Estonia, Finland, Iceland, Latvia, Lithuania, Malta, Moldavia, Russia, Romania, Turkey and the Ukraine. On September 30, 2004, the Company had not met their minimum purchase requirements under their master distribution agreement.
 
 
 **NOTE 9 - COMMITMENT AND CONTINGENCIES**
 
 During the period the Company has been focusing on effectuating and implementing its business plan which includes building product recognition, gaining market share, meeting customer expectations, tailoring products to meet customer specifications, following up and ensuring customer satisfaction. As such, the Company has accumulated a deficit of $3,636,428 to date and additional financing will be required by the Company to fund its sales and marketing program and to support operations. Management plans to mitigate its losses in future years by increasing sales and reducing certain operating expenses that were associated with launching the product, changes in management, technical problems with the tracking units and tailoring the products to meet customer specifications, expectations and demands. However, there is no assurance that the Company will be able to obtain additional financing. There is no assurance that they will be able to build product recognition, gain market share, meet customer expectations, tailor products to meet customer specifications, follow up or ensure customer satisfaction. Furthermore there is no assurance that the Company will be able to keep up with rapid technological changes, changing customer needs and evolving industry standards and that the Company will be able to grow their market share or introduce new products and services on a continual and timely basis. There is also no assurance that the Company will be able to increase sales and reduce certain operating expenses associated with; launching the product, changes in management, technical problems with the tracking units and tailoring the products to meet customer specifications, expectations and demands. The financial statements do not include any adjustments that might result from the outcome of those uncertainties.
 
 
 
  ***Page - 10***  **Item 2 - Managements Discussion and Analysis of Results of Operations and Financial Condition**
 
 THE FOLLOWING IS A DISCUSSION AND ANALYSIS THAT MANAGEMENT BELIEVES IS RELEVANT TO AN ASSESSMENT AND UNDERSTANDING OF THE CONSOLIDATED RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF GLOBETRAC AND ITS SUBSIDIARY (COLLECTIVELY, "GLOBETRAC" OR THE "COMPANY") FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2004 AND 2003. THE FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE HEREIN AND MANAGEMENTS DISCUSSION AND ANALYSIS INCLUDED IN GLOBETRACS ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2003.
 
 **Overview**
 
 GlobeTrac is in the business of selling, marketing, distributing and installing global wireless tracking and telematics equipment. The Company was incorporated in the state of Delaware on March 2, 2000 and its principal executive offices are headquartered in London, England.
 
 On June 19, 2002, Global Axxess entered into a master distributorship agreement with WebTech Wireless Inc. ("WebTech") whereby WebTech granted Global Axxess the exclusive right to distribute the Quadrant System TM, a wireless vehicle tracking, communications and telematics system composed of hardware and software products in Europe **.** On June 4, 2003, GlobeTrac England and WebTech entered into a letter agreement whereby Global Axxesss exclusive distribution rights were extended to October 15, 2006 and the minimum purchase requirements were amended. On March 8, 2004, Global Axxess mutually  entered into a letter agreement with WebTech whereby WebTech agreed to allow Global Axxess to delay meeting its minimum purchase requirements until May 1, 2004, in exchange for Global Axxess giving up its exclusive rights to sell WebTechs products in Belarus, Bulgaria, Cyprus, Estonia, Finland, Iceland, Latvia, Lithuania, Malta, Moldavia, Russia, Romania, Turkey and the Ukraine.
 
 While management was very pleased with the results of the first and second quarters of 2004 and was optimistic that the company was at long last on its way to profitability after suffering constant business stops and starts due to product problems with previous models, namely the L2000s and the T3000s during late 2002 and all through 2003, we must report that during the third quarter of 2004, our sales dropped dramatically. We have experienced major  product failures with the WT4000, beginning with a shipment to our largest reseller in France in May of this year. Our reseller sold 100 units of the 200 units purchased from us to a high profile customer in Paris. Within 3 days, 50 of those units failed in the field. As a result our reseller has sent back the 100 units they still had in stock for replacement and when they are returned will use them to progressively replace the other 100 units in the field. The cost of replacing these units is circa Euro100 per vehicle and we are uncertain that they will continue to purchase the WebTech product. Unfortunately the problems occurred  across our entire reseller and customer base to which were added major failures with the portal during the August/September time frame. As a consequence of these  product problems many of our resellers/customers have withheld payments to us with some still outstanding as of the date of writing. This has adversely affected the cash flow of GlobeTrac and we have had to cease all business development and marketing activities.
 
 We are currently in the process of negotiating with WebTech for the termination of the Master Distributorship Agreement and for the restructuring of an ongoing business relationship with them.
 
 Due to cash flow limitations GlobeTrac has been forced to begin to wind down our Irish based subsidiary, Global Axxess Corporation Limited and GlobeTrac Limited, our operating company in the United Kingdom. In the interim, we have relinquished our portal customers to WebTech Wireless in an effort to prevent current customers from being adversely affected while negotiations are in progress.
 
 We are hoping the discussions with WebTech will lead to a mutually viable solution. Once a mutually viable solution is reached with WebTech, GlobeTrac intends to seek new business opportunities.
 
 **Results of Operations**
 
 Revenues
 
 Revenue decreased by $140,627 or 59% from $236,762 for the three month period ended September 30, 2003 to $96,135 for the three month period ended September 30, 2004. The decrease in revenue was due to defective products.
 
 ***Page - 11***
 Revenue increased by $544,480 or 147% from $369,387 for the nine month period ended September 30, 2003 to $913,867 for the nine month period ended September 30, 2004. The increase in revenue was achieved through promising first and second quarter results where we began to gain market share through brand recognition and distribution of products to resellers.
 
 Cost of Sales
 
 Cost of sales decreased by $98,145 or 60% from $163,349 for the three month period ended September 30, 2003 to $65,204 for the three month period ended September 30, 2004. The decrease was due to a decrease in sales during the period. Our gross margin decreased $42,482 or 58% from $73,413 for the three month period ended September 30, 2003 to $30,931 for the three month period ended September 30, 2004. As a percentage of revenue, our gross margin was 32% for the three month period ended September 30, 2004 compared to a gross margin of 31% for the three month period ended September 30, 2003.
 
 Cost of sales increased by $360,958 or 142% from $253,544 for the nine month period ended September 30, 2003 to $614,502 for the nine month period ended September 30, 2004. The increase was due to an increase in sales during the period. Our gross margin increased by $183,522 or 158% from $115,843 for the nine month period ended September 30, 2003 to $299,365 for the nine month period ended September 30, 2004. As a percentage of revenue, our gross margin was 33% for the nine month period ended September 30, 2004 compared to a gross margin of 31% for the nine month period ended September 30, 2003.
 
 Operating Expenses
 
 Operating expenses decreased by $116,606 or 25% from $474,411 for the three month period ended September 30, 2003 to $357,805 for the three month period ended September 30, 2004. The decrease was primarily due to decreases of $40,417 in office expenses, $296 in bank charges, $31,291 in installation expenses, $5,381 in rent, $45,879 in marketing and advertising, $30,181 in travel, $20,130 in foreign exchange offset by increases of $8,567 in professional fees, $646 in consulting fees, $347 in depreciation, $1,494 in filing fees, $5,480 in telephone and $20,305 in wages. The decrease in operating costs was primarily caused by a reduction in our sales and marketing department. As a percentage of sales our operating expenses increased by 172% from 200% for the three month period ended September 30, 2003 to 372% for the three month period ended September 30, 2004
 
 Operating expenses decreased by $220 or nil% from $1,243,916 for the nine month period ended September 30, 2003 to $1,243,696 for the nine month period ended September 30, 2004. The decrease was primarily due to decreases of $87,173 in consulting fees, $14,833 in office expenses, $247 in bank charges, $77,603 in installation expenses, $14,833 in management fees, $4,114 in bad debts, $18,810 in marketing and advertising, $23,879 in travel and $24,873 in foreign exchange offset by increases of $3,100 in professional fees, $1,174 in depreciation, $1,958 in filing fees, $10,510 in rent, $7,410 in telephone and $217,120 in wages. The decrease operating costs was primarily caused by a reduction in our sales and marketing department. As a percentage of sales our operating expenses decreased by 201% from 337% for the six month period ended September 30, 2003 to 136% for the nine month period ended September 30, 2004.
 
 Deferred Tax Assets
 
 We had deferred tax assets of approximately $980,000 and $550,000 at September 30, 2004 and 2003. We have established a valuation allowance equal to the full amount of the deferred tax assets because our ability to use these losses is uncertain.
 
 Interest Expense
 
 Interest expense increased by $23,652 or 95% from $24,781 for the three months ended September 30, 2003 to $48,433 for the three months ended September 30, 2004 primarily due to an increase on convertible notes payable and the note payable to a related party.
 
 Interest expense increased by $26,840 or 37% from $73,279 for the nine months ended September 30, 2003 to $100,119 for the nine months ended September 30, 2004 primarily due to an increase in convertible notes payable and the note payable to a related party
 
 ***Page - 12***
 **Liquidity and Capital Resources**
 
 We had cash of $14,060 and a working capital deficit of $2,436,397 at September 30, 2004. During the nine month period ended September 30, 2004, we used $450,396 in cash for operating activities, primarily due to an operating loss of $1,037,093, an increase in accounts receivable of $96,840, offset by depreciation of $2,397, a decrease in inventory of $242,638, a decrease in prepaid expenses of $5,117, an increase in accounts payable and accrued liabilities of $48,307, an increase in accrued interest payable to a related party of $37,432, an increase in accounts payable to related parties of $306,227 and an increase in accrued interest payable on convertible debt of $61,419. Cash used in operations of $450,396 was financed by an increase in convertible notes payable on demand of $457,436 and advances payable of $5,460 offset by an equipment purchase of $2,209 and the effect of exchange rate changes on cash of $5,041. A decrease in working capital of $1,041,946 was due to a decrease in current assets of $145,665 and an increase in current liabilities of $896,281. We have accumulated a deficit of $3,636,428 since inception and have a stockholders deficit of $2,429,458. We have no contingencies or long-term commitments except for the agreement with WebTech Wireless Inc.
 
 **Plan of Operation for the Next Twelve Months**
 
 During the next twelve months we hope to negotiate a mutually agreeable settlement with WebTech which will provide us with sufficient cash flow to fund our working capital needs while we seek out new business opportunities. Although the foregoing actions are expected to cover our anticipated cash needs for working capital for at least the next 12 months, no assurance can be given that we will be able to raise sufficient cash to meet these cash requirements.
 
 We plan to improve cash flow by cutting costs to the bare minimum and negotiating a favorable settlement with WebTech.
 
 We are not currently conducting any research and development activities.
 
 **Critical Accounting Policies**
 
 GlobeTracs financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumption that affect the reported amounts of assets, liabilities, revenue and expenses. The following paragraphs include a discussion of accounting policies critical to GlobeTrac:
 
 Revenue Recognition
 
 Revenue is recognized when the product is shipped to a reseller or end-user or when installation of the wireless tracking and telematics equipment has been completed; price is fixed or determinable and collectability is reasonably assured.
 
 Accounts Receivable
 
 Receivables represent valid claims against debtors for sales arising on or before the balance sheet date and are reduced to their estimated net realizable value. An allowance for doubtful accounts is based on an assessment of the collectability of all past due accounts.
 
 Inventories
 
 Inventory is stated at the lower of cost (first-in, first-out) or market value. Market value represents the lower of replacement cost or estimated net realizable value.
 
 Foreign Currency
 
 The financial statements of the Companys English and Irish subsidiaries are measured using the British Pound and Euro as the functional currencies. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average exchange rates for the year. The resulting cumulative translation adjustments have been recorded as a separate component of stockholders equity. Foreign currency transaction gains and losses are included in consolidated net income.
 
 Comprehensive Income
 
 Comprehensive income reflects changes in equity that result from transactions and economic events from non-owner sources. Comprehensive income for the current period represents foreign currency translation items associated with the Companys English and Irish operations.
 
 ***Page - 13***
 **Contractual Obligations**
 
 The following table provides a summary of GlobeTracs debt obligation as of September 30, 2004. This table excludes obligations under the master distributorship agreement because commitments under that agreement have been verbally waived and GlobeTrac cannot predict what its commitments will be, if any at September 30, 2004. At the date of writing these contractual commitments are still under negotiation with WebTech and it is still not known whether WebTech will try to enforce said commitments and thereby effectively remove our exclusivity for Europe or whether they will agree to forego or defer this commitment. GlobeTrac has not included advances payable because these advances have no fixed terms of repayment and GlobeTrac cannot predict when they will repay them.
 
 
 **CONTRACTUAL PAYMENTS DUE BY YEAR**
 
 **Current Year 2004**Note and accrued interest payable to related party
$ 592,226Convertible notes and accrued interest payable on demand
1,571,167
 
 
 **Internal and External Sources of Liquidity**
 
 GlobeTrac has funded its operations principally from issuance and subscription for common stock and borrowings in the form of advances payable.
 
 **Inflation**
 
 GlobeTrac does not believe that inflation will have a material impact on its future operations.
 
 **Uncertainties relating to Forward Looking Statements**
 
 This Form 10-QSB Quarterly Report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by their use of words like "plans", "expect", "aim", "believe", "projects", "anticipate", "intend", "estimate", "will", "should", "could" and other expressions that indicate future events and trends. All statements that address expectations or projections about the future, including statements about GlobeTracs strategy for growth, product development, market position, expenditures and financial results are forward-looking statements.
 
 Forward-looking statements in this Form 10-QSB include statements regarding the following expectations:
 
 1.
GlobeTracs reseller in France will not continue to purchase the WebTech product. 2.
GlobeTrac will cease all business development and marketing activities. 3.
WebTech will allow GlobeTrac to terminate the Master Distribution Agreement. 4.
GlobeTrac will successfully restructure an ongoing business relationship with WebTech. 5.
Cash flow limitations will cause GlobeTrac to wind down operations in Global Axxess Corporation Limited and GlobeTrac Limited. 6.
Portal customers will not be adversely affected while negotiations with WebTech are in progress. 7.
Negotiations with WebTech will lead to a mutually viable solution. 8.
GlobeTrac will seek out a new business. 9.
GlobeTrac will enter into a mutually agreeable settlement with WebTech . 10.
GlobeTrac will receive sufficient cash from WebTech to fund their working capital needs while they seek our new business opportunities. 11.
GlobeTrac will be able to cut costs to the bare minimum. 
 All forward-looking statements are made as of the date of filing of this Form 10-QSB and GlobeTrac disclaims any duty to update such statements.
 
 ***Page - 14***
 Certain parts of this Form 10-QSB may contain "forward-looking statements" within the meaning of the Securities Exchange Act of 1934 based on current managements expectations. Actual results could differ materially from those in the forward looking statements due to a number of uncertainties including, but not limited to, those discussed in this section. Factors that could cause future results to differ from these expectations include general economic conditions, particularly related to demand for GlobeTracs products and services; changes in business direction or strategy; competitive factors (including competitors introducing superior products); pricing pressure (including competitors offering similar products at lower prices); inability to attract, develop or retain technical, consulting managerial, sales personnel, agents, distributors or independent contractors; changes in consumer tastes; inability to obtain product from the manufacturer and evolving industry products and standards. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate.
 
 GlobeTrac may, from time to time, make oral forward-looking statements. GlobeTrac strongly advises that the above paragraph and the risk factors described in this annual report and in GlobeTracs other documents filed with the United States Securities and Exchange Commission should be read for a description of certain factors that could cause the actual results of GlobeTrac to materially differ from those in the oral forward-looking statements. GlobeTrac disclaims any intention or obligation to update or revise any oral or written forward-looking statements whether as a result of new information, future events or otherwise.
 
 **PART II - OTHER INFORMATION**
 
 **Item 1. Legal Proceedings.**
 
 GlobeTrac is not a party to any pending legal proceedings and, to the best of GlobeTracs knowledge, none of GlobeTracs assets are the subject of any pending legal proceedings.
 
 **Item 2. Changes in Securities.**
 
 During the quarter of the fiscal year covered by this report, (i) GlobeTrac did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) GlobeTrac did not sell any unregistered equity securities.
 
 **Item 3. Defaults Upon Senior Securities.**
 
 During the quarter of the fiscal year covered by this report, no material default has occurred with respect to any indebtedness of GlobeTrac. Also, during this quarter, no material arrearage in the payment of dividends has occurred.
 
 **Item 4. Submission of Matters to a Vote of Security Holders.**
 
 No matter was submitted to a vote of security holders through the solicitation of proxies or otherwise, during the quarter of the fiscal year covered by this report.
  ***Page - 15***  
 **Item 6. Exhibits and Reports on Form 8-K**
 
 **(a)**
**Exhibits** 
 All Exhibits required to be filed with the Form 10-QSB are incorporated by reference to GlobeTracs previously filed Form SB-2 and Form 10-KSB.
 
 **Exhibit**
**Description**
**Status****3.1**
Articles of Incorporation filed as an Exhibit to GlobeTracs registration statement on Form SB-2 filed on August 2, 2001, and incorporated herein by reference.
Filed**3.2**
Bylaws filed as an Exhibit to GlobeTracs registration statement on Form SB-2 filed on August 2, 2001, and incorporated herein by reference.
Filed**3.3**
Certificate of Amendment to Articles of Incorporation changing the Issuers name to GlobeTrac Inc. filed as an exhibit to GlobeTracs Form 10-KSB filed on April 15, 2003, and incorporated herein by reference.
Filed**10.1**
Master Distributorship Agreement dated June 19, 2002 among WebTech Wireless International, WebTech Wireless Inc. and Global Axxess Corporation Limited filed as an attached exhibit to GlobeTracs Form 8-K (Current Report) filed on September 11, 2002, and incorporated herein by reference.
Filed**10.2**
Loan Agreement dated November 27, 2002 between GlobeTrac Inc. and David Patriquin with attached promissory note dated November 27, 2002 filed as an exhibit to GlobeTracs Form 10-KSB filed on April 15, 2003, and incorporated herein by reference.
Filed**10.3**
Amendment Letter Agreement dated June 4, 2003, between WebTech Wireless International Inc. and Globetrac Limited for the purpose of amending terms of the Master Distributorship Agreement filed as an exhibit to GlobeTracs Form 10-KSB filed on April 7, 2004, and incorporated herein by reference.
Filed**10.4**
Amendment Letter Agreement dated March 8, 2004 between WebTech Wireless International Inc. and Globetrac Limited for the purpose of amending terms of the Master Distributorship Agreement filed as an exhibit to GlobeTracs Form 10-KSB filed on April 7, 2004, and incorporated herein by reference.
Filed**31**
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Included**32**
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Included**99.1**
Code of Ethics filed as an exhibit to GlobeTracs Form 10-KSB filed on April 15, 2003, and incorporated herein by reference.
Filed 
 
 **(b)**  **Reports on Form 8-K.**
 
 No reports were filed during the quarter of the fiscal year covered by this report.
  ***Page - 16***  
 **SIGNATURES**
 
 In accordance with the requirements of the Securities Exchange Act of 1934, GlobeTrac has caused this report to be signed on its behalf by the undersigned duly authorized person.
 
 **GLOBETRAC INC.**
 
 
 *By: /s/ Jim Pratt*      ******
 ******
 Name:  **Jim Pratt**
 Title **:**  **Director and CEO**
 Dated:  **November 15, 2004**
 
 
 *By: /s/ John daCosta*
 Name:  **John daCosta**
 Title **:**  **CFO**
 Dated:  **November 15, 2004**
 
  ***Page - 17***  
 
 **Exhibit 31**
 
 
 
  ***Page - 18***   **GLOBETRAC INC.**
 **CERTIFICATIONS PURSUANT TO**
 **SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**
   **CERTIFICATION**
   I, Jim Pratt, certify that:
   1.   I have reviewed this quarterly report on Form 10-QSB of GlobeTrac Inc.;
  2.   Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
  3.   Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
  4.   The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
  a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
  b)   evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
  c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
  5.   The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):
  a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
  b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
  6.   The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
   Date: November 15, 2004
   
   */s/ Jim Pratt*
 Jim Pratt
 Chief Executive Officer
  
  ***Page - 19***   **GLOBETRAC INC.**
 **CERTIFICATIONS PURSUANT TO**
 **SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**
   **CERTIFICATION**
   I, John daCosta, certify that:
   1.   I have reviewed this quarterly report on Form 10-QSB of GlobeTrac Inc.;
  2.   Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
  3.   Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
  4.   The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
  a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
  b)   evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
  c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
  5.   The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):
  a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
  b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
  6.   The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
   Date: November 15, 2004
   
   */s/ John daCosta*
 John daCosta
 Chief Financial Officer
   ***Page - 20***  
 
 **Exhibit 32**
 
 
  ***Page - 21***   
  **CERTIFICATION PURSUANT TO**
 **18 U.S.C. SECTION 1350,**
 **AS ADOPTED PURSUANT TO**
 **SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**
   
   In connection with the Quarterly Report of GlobeTrac Inc. ("GlobeTrac") on Form 10-QSB for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jim Pratt, President, Chief Executive Officer of GlobeTrac and a member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
   (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  (2)   The information contained in the Report fairly represents, the financial condition and result of operations of GlobeTrac.
   
   */s/ Jim Pratt*
 Jim Pratt
 Chief Executive Officer
 November 15, 2004
   
 ***Page - 22***
   
   **CERTIFICATION PURSUANT TO**
 **18 U.S.C. SECTION 1350,**
 **AS ADOPTED PURSUANT TO**
 **SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**
   
   In connection with the Quarterly Report of GlobeTrac Inc. ("GlobeTrac") on Form 10-QSB for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John daCosta, Secretary, Treasurer, and Chief Financial Officer of GlobeTrac, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
   (1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  (2)   The information contained in the Report fairly represents, the financial condition and result of operations of GlobeTrac.
   
   */s/ John daCosta*
 John daCosta
 Chief Financial Officer
 November 15, 2004
  
 ***Page - 23***